Stock A$.$beta $=1\mathrm{.}2$ Expected retiurn $=15\%.$Stock B beta $=1\mathrm{.}0$ Expected return $=12\%$cjStocjkp. ReturnStoStock B $1\mathrm{.}012\%$

Stock C $0\mathrm{.}7$ Ecxpected return $=8\%$ Stock D$1\mathrm{.}5$ Expected return $=18\%$From the above details, please answer the followings:a$)$ What is systematic risk? How is it measured?Classify these securities according to their systematic risk.b$)$ Find the required rate of return for each of the securities as per CAPM. Assum return on T$-$Bill and Nifty for the period are $6\%$ and $12\%$ respectively.c$)$ Which of these securities are mispriced as per CAPM?d$)$ Calculate the abnormal returns for each of the securities and develop your investment strategies based upon it$.$

Answer rating: 100% (QA)

a Systematic risk also known as market risk is the risk associated with the overall market movements ... View the full answer